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WinInfo Short Takes: Week of October 27, 2008

An often irreverent look at some of the week's other news, including a blockbuster PDC 2008 with ongoing live coverage, Microsoft quarterly earnings coverage with breakdowns by business unit, Windows Vista and Office 2007 SP2 releases, and so much more...

WinInfo Blog

Well, it's finally happening. Tomorrow morning, on Saturday, I will fly to Los Angeles, California for Microsoft's Professional Developers Conference (PDC) 2008, a mammoth and eagerly awaited show where the software giant will show off Windows 7, Windows Server 2008 R2, Office 14, its cloud OS, and other as-yet-unknown products and services for the first time. For guys like me who cover Microsoft for a living, this is the big one. So I approach PDC with a weird combination of excitement and queasiness, alternatively looking forward to it and yet dreading it at the same time. I don't think I'm bipolar per se, but at times like this I wonder.

Speaking of PDC 2008, I will be covering the show on an ongoing basis. Please stay tuned to the SuperSite for Windows for PDC musings, articles, photos, video, and other content. It's going to be amazing.http://www.winsupersite.com/pdc

Thanks to everyone who participated in the third give-away for my new book, Windows Vista Secrets SP1 Edition, last week. I've now given away 30 copies of the book, and Wiley tells me that another 30 is on the way, so I'll be doing more soon. However, thanks to PDC, I will wait until I get back to announce the next give-away. And don't forget you can still order the book from Amazon at a hefty 37 percent discount. Thanks for your support.http://tinyurl.com/vistasecrets

Microsoft Earnings: As Expected, Outlook Better Than ExpectedMicrosoft on Thursday reported financial results for its fiscal first quarter of 2009, posting a profit of $4.37 billion (up 2 percent year over year) on revenues of $15.06 billion (up 9 percent). The results exceeded analysts' expectations, and though Microsoft warned that the coming quarters could be "soft" due to ongoing worldwide financial trauma, many were surprised that the company's outlook was better than expected. Microsoft, in fact, downgraded its fiscal 2009 financial prediction, but just not as much as expected: Sales this year, the company says, will be in the $64.9 billion to $66.4 billion range. Because of the economic climate, Microsoft CFO Chris Liddell said the company would "take a more conservative stance" going forward and lower expenses by $500 million for the remainder of the fiscal year. It will do so by scaling back on hiring, reducing travel, and lowering marketing costs.

Microsoft Earnings: Business SalesBecause many of Microsoft's corporate customers have long-term contracts with the software giant, the company is better positioned than many of its rivals. Put simply, it has guaranteed income coming in, and Microsoft reports it over time, smoothing out the highs and lows that would otherwise punctuate its earnings.

Microsoft Earnings: WindowsSales of Windows Vista were up just 1.9 percent year-over-year, lower than Microsoft's prediction of 6 percent growth. Despite claims from some analysts that this represents proof of Vista's failings with businesses, Microsoft says that the downturn was due to increasing sales in low-end and emerging markets, which typically involve low-cost versions of Windows. The unit earned a profit of $3.27 billion in the quarter on revenues of $4.2 billion.

Microsoft Earnings: ServersServer sales were up 17 percent in the quarter, but that was a bit lower than the 19 percent Microsoft previously predicted. This one is sort of hard to register: Windows Server 2008 first shipped in the previous quarter and the next big releases--SBS 2008, Windows EBS 2008, and SQL Server 2008, are all forthcoming.

Microsoft Earnings: OfficeRevenue in Microsoft's Business Division, which is responsible for its blockbuster Office suite and related products, jumped 20 percent in the quarter to $4.95 billion, earning profits of $3.3 billion. That means Office is responsible for one-third of the company's revenues, which isn't too shabby for a decades-old product that was considered passé just a few years ago.

Microsoft Earnings: Xbox 360Xbox 360 revenues fell 6 percent, but that was much better than the 26 percent fall analysts expected, so the quarter was considered a success. (You gotta love how the Xbox 360 gets a pass in the common sense department.) Microsoft sold just 2.2 million Xbox 360 consoles in the quarter, earning a profit of $178 million on $1.8 billion in revenues. A late September console price cut heading into the holiday season could make for an interesting current quarter, I suppose.

Microsoft Earnings: Internet ServicesMicrosoft's online services continued to bring up the rear in the quarter, with revenues up 15 percent. Predictably, however, the unit swung to a loss of $480 million on revenues of $770 million. Keep searching, guys.

Microsoft Admits Windows Vista, Server 2008 SP2 Coming Next YearAdmitting to rumors that it was prepping a second service pack for Windows Vista and Server 2008, Microsoft this week issued the following statement: "Microsoft is working on a second service pack for Windows Vista and Windows Server 2008. Service packs are part of the traditional software life cycle--they're something we create for all Microsoft products as part of our commitment to continuous improvement. And, as is standard, Microsoft is continuously having conversations with key stakeholders, prior to broadly distributing test builds. We will share more details in the coming months." Expect to see it ship in Q2 2008, and don't expect to see any new features: This one is just a regular service pack, aggregating previous patches into a single installer. Meanwhile, you can expect Office 2007 SP2 to hit a little earlier than Vista SP2, probably in first quarter of 2009.

Chinese Upset Over New Anti-Piracy Functionality in Windows XP, Vista Does this qualify as ironic, or is it just hypocritical? There's been a public outcry in China over a recent change in Windows Vista and XP that causes systems suspected of being pirated to move into a mode where the desktop turns black and the user is regularly alerted about the issue. This mode, which does not reduce the functionality of Windows in any way, has been implemented around the world and hasn't caused any kind of reaction elsewhere. In China, an estimated 50 to 75 percent of all software is pirated, while legitimate versions of Windows and Office are much less expensive than in other places. For example, a retail copy of Windows Vista Home Basic costs about $73 in China right now, and Office Home and Student can be had for roughly $29. So what's the outcry? You only see the black screen when you're using pirated software, guys. It's time to pony up.

Attack Code Appears for This Week's Unscheduled Security PatchHackers have already developed attack code that can exploit the previously-unknown vulnerability that Microsoft suddenly and unexpectedly patched earlier this week. The vulnerability affects all modern Windows versions, but is most devastating to Windows 2000, XP, and 2003. It affects the Server service, which is pretty low-level and thus affects every Windows version on the market, including the stripped down Windows Server 2008 Server Core install type. Security researchers say that now that Microsoft has released the patch, hackers can easily reverse-engineer it to see what's being fixed. And while the vulnerability is indeed serious, it's a basic stack overflow problem that is "very controllable." What Microsoft is really concerned with is that it developed tools to discover this very kind of problem years ago, and its tool did not discover this vulnerability. So it's reevaluating those tools now to see what went wrong.

And I Am Outta Here...Well, it's going to be a stressy day getting ready for my PDC trip, so I better get to it. See you on the other side (of the country, that is)...